Financial accounting is the process of recording, summarizing and reporting the myriad of transactions resulting from business operations over a period of time. These transactions are summarized in the preparation of Financial Statements, including the Financial Position also called as Balance Sheet, Income Statement and Cash Flow Statement that encapsulate the company’s operating performance over a specified period.
Financial accounting utilizes a series of established accounting principles. The selection of accounting principles to use during the course of financial accounting depends on the regulatory and reporting requirements the business faces. The Companies are required to perform financial accounting reports in accordance with Singapore Financial Reporting Standards and based on International Financial Reporting Standards. The establishment of these accounting principles is to provide consistent information to creditors, investors, regulators and tax authorities.
Financial reporting occurs through the use of financial statements. The financial statements present the five main classifications of financial data: revenues, expenses, assets, liabilities and equity. Revenues and expenses are accounted for and reported on the income statement. Financial accounting results in the determination of net income at the bottom of the income statement. Assets, liabilities and equity accounts are reported on the balance sheet. The balance sheet utilizes financial accounting to report ownership of the future economic benefits of the company.
Financial accounting is to be performed using accrual method in Singapore. Accrual accounting entails recording transactions when the transactions have occurred and the revenue is recognizable.
The key difference between financial and management accounting is that financial accounting aims at providing information to parties outside the organization, whereas management accounting information is aimed at helping managers within the organization make decisions. Financial statement preparation using accounting principles is most relevant to regulatory organizations and financial institutions. Because there are numerous accounting rules that do not translate well into business operation management, different accounting rules and procedures are utilized by internal management for internal business analysis.
At ACHI BIZ, we will help manage your needs of preparation of un-audited Financial Statements according to the standards set by the relevant Authorities. Our experts will assure to pay attention to the results because that is the best way to develop a plan that can help accomplish those results. Our experts will manage the preparation of un-audited Financial Statements with perfection that your company will smoothly reach the level of submissions with the relevant authorities in due course that you have always wanted in your management policies.
❓ What are un-audited financial statements in Singapore?
👉 Un-audited financial statements are financial reports prepared by the company without external auditor verification, showing its financial position and performance.
❓ Are financial statements mandatory for Pte Ltd companies in Singapore?
👉 Yes, all Pte Ltd companies must prepare financial statements every year, regardless of whether they are active, inactive, dormant, making profits or losses.
❓ Does audit exemption mean financial statements are not required?
👉 No, audit exemption only removes the need for audit. Companies must still prepare proper financial statements annually.
❓ What are the main components of financial statements?
👉 A complete set typically includes directors’ statement, profit and loss statement, balance sheet, statement of changes in equity, cash flow statement, and notes to the financial statements.
❓ Why are financial statements important for businesses?
👉 They help in decision-making, track financial performance, ensure compliance, and build credibility with stakeholders such as banks and investors.
❓ Are financial statements required for ACRA and IRAS filing?
👉 Yes, financial statements are required for Annual Return filing with ACRA and for tax filings such as ECI and Corporate Income Tax returns with IRAS.
❓ What documents are needed to prepare financial statements?
👉 Companies need management reports such as trial balance, general ledger, bank statements, receivables and payables schedules, payroll records, and supporting invoices.
❓ Why do government agencies require financial statements?
👉 Agencies like MOM, BCA and grant authorities use financial statements to assess a company’s financial strength, compliance, and ability to meet obligations.
❓ Are financial statements required for work pass applications?
👉 Yes, MOM may require financial statements when assessing Employment Pass or S Pass applications and renewals.
❓ Do banks require financial statements for loans?
👉 Yes, banks rely on financial statements to evaluate a company’s financial health before approving loans or credit facilities.
❓ Can financial statements help when selling a company?
👉 Yes, properly prepared financial statements improve transparency, reduce due diligence risks, and increase buyer or investor confidence.
❓ What happens if financial statements are not prepared properly?
👉 It may lead to tax errors, penalties, rejection of applications, difficulty in obtaining financing, and loss of credibility.
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